Synopsys ( SNPS Quick Quote SNPS - Free Report) is slated to report fourth-quarter fiscal 2023 results after market close on Nov 29.
The company anticipates revenues between $1.567 billion and $1.597 billion for the fiscal fourth quarter. The Zacks Consensus Estimate for the same is pegged at $1.58 billion, suggesting growth of 23.3% from the year-ago period.
Synopsys expects non-GAAP earnings per share between $3.01 and $3.06. The Zacks Consensus Estimate of $3.04 per share indicates growth of 59.2% year over year.
The software company surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 4.2%.
Let’s see how things have shaped up before the upcoming announcement.
Synopsys’ fourth-quarter performance is likely to have benefited from the growing demand for its solid product portfolio. The continuous shift to high-performance cloud computing due to the growing hybrid working environment is expected to have aided the demand for the company’s Intellectual Property (IP) solutions, such as Peripheral Component Interconnect Express 5.0 & 6.0, 800G Ethernet and DDR5 memory.
The growing impact of artificial intelligence (AI), 5G, the Internet of Things, high-performance computing, the Cloud and automotive is anticipated to have boosted the demand for Synopsys’ advanced solutions in the fourth quarter. The company is likely to have gained from growth in Fusion Compiler, which is fueled by large deal wins in the 5G, AI and server chip markets.
The increasing adoption of Synopsys.ai among the chip manufacturers and vendors is also anticipated to have driven the revenues during the to-be-reported quarter. The extended partnership with Intel for improving its fabrication processes using the company’ EDA, IP and multi-die systems is likely to have been acting as a catalyst in the quarter under review.
In the fiscal fourth quarter, the increasing global design activity and customer engagements are likely to have been Synopsys’ growth drivers. The strong adoption of interface and foundation IP solutions is likely to have boosted revenues for SNPS’ interface portfolio. Additionally, widespread contract wins and the increasing deployment of the Fusion Platform, including Fusion Compiler, might drive the company’s fiscal fourth-quarter results. Our estimate for the Design IP product segment’s fourth-quarter revenues is pegged at $377.2 million.
Synopsys’ partnership with industry leaders like Microsoft and Taiwan Semiconductor Manufacturing Company is expected to have accelerated the deployment of its cloud solutions. This might have aided the company’s top line during the quarter under review.
SNPS’ solid electronic design automation software partner base, which includes Advanced Micro Devices, Juniper Networks, Realtek, Toshiba and Wolfson, is likely to have served as a major revenue driver. Increased design investments in Synopsys’ ARC processors by automotive companies are also an upside. Further, the strong adoption of security solutions for interfaces, such as PCI Express, CXL and DDR, with more than 30 design wins across all market segments, is positive. Our estimates for the Electronic Design Automation and Software Integrity product categories are pegged at $1.05 billion and $148.4 million.
However, the heightened competition from the likes of Cadence Design Systems might have played a spoilsport for Synopsys. The tightening corporate budget amid ongoing macroeconomic challenges and unfavorable currency exchange rates are likely to have partially offset the benefits of the aforementioned factors.
What Our Model Says
Our proven model does not conclusively predict an earnings beat for SNPS this season. The combination of a positive
Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that’s not the case here.
Though Synopsys currently carries a Zacks Rank of 2, it has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our
Earnings ESP Filter. Stocks With the Favorable Combination
Per our model,
Micron Technology ( MU Quick Quote MU - Free Report) , Snowflake ( SNOW Quick Quote SNOW - Free Report) and Marvell Technology ( MRVL Quick Quote MRVL - Free Report) have the right combination of elements to post an earnings beat in their upcoming releases.
Micron carries a Zacks Rank #3 and has an Earnings ESP of +26.69% at present. The company is scheduled to report first-quarter fiscal 2024 results on Dec 20. Its earnings surpassed the Zacks Consensus Estimate twice in the trailing four quarters while missing on two occasions, the average negative surprise being 67.7%. You can see
. the complete list of today’s Zacks #1 Rank stocks here
The Zacks Consensus Estimate for Micron’s first-quarter earnings is pegged at a loss of $1.02 per share, wider than the year-ago quarter’s loss of 4 cents. The consensus mark for revenues is pegged at $4.43 billion, suggesting a year-over-year increase of 8.5%.
Snowflake has a Zacks Rank #2 and an Earnings ESP of +67.33% at present. The company is slated to report third-quarter fiscal 2024 results on Nov 29. SNOW’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 244.5%.
The Zacks Consensus Estimate for third-quarter earnings is pegged at 16 cents per share, suggesting an increase of 45.5% from the year-ago quarter’s earnings of 11 cents. Snowflake’s quarterly revenues are estimated to grow 27.6% year over year to $710.5 million.
Marvell carries a Zacks Rank #3 and has an Earnings ESP of +0.18% at present. The company is scheduled to report third-quarter fiscal 2024 results on Nov 30. Its earnings beat the Zacks Consensus Estimate thrice in the preceding four quarters while missing on one occasion, with the average surprise being 1.7%.
The Zacks Consensus Estimate for Marvell’s third-quarter earnings is pinned at 40 cents per share, indicating a year-over-year decline of 29.8%. It is estimated to report revenues of $1.4 billion, which suggests a decrease of approximately 8.9% from the year-ago quarter.
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